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US dollar faces rising competition for stablecoin backing

US dollar faces rising competition for stablecoin backing

GrafaGrafa2025/04/29 09:20
By:Mahathir Bayena

Reeve Collins, co-founder of Tether (CRYPTO:USDT), has highlighted that while US dollar-backed stablecoins currently dominate the market, other currencies and asset types are emerging as competitors in backing stablecoins.

“The stablecoin definitely helps preserve the dollar dominance, especially in the crypto space. The dollar is kind of the reserve currency of crypto. But now there are other currencies coming into play. But more importantly, it's not currencies. It's other types of backing,” Collins explained.

He pointed to real-world assets such as money-market funds, commodities, and gold as potential stablecoin backings that could offer higher yields than traditional US Treasury bills.

“When you can back it with money market funds, for instance, that generate a higher yield than T-bills and other things like that that are coming onchain, where there’s a lot of yield that will be generated. Those will take precedence,” Collins said.

He also noted that tokenization of real-world assets will diversify stablecoin backing beyond just the US dollar, saying, “You’re going to have a lot of choices other than just dollars.”

Collins is backing a new yield-bearing stablecoin project, Pi Protocol, which aims to launch on Ethereum (CRYPTO:ETH) and Solana (CRYPTO:SOL) blockchains in 2025 and will be backed by yield-generating assets.

He also commented on the recent launch of a Trump-backed stablecoin on BNB Chain (CRYPTO:BNB) and Ethereum, describing it as a milestone that “lays the foundation for the rest of the world to do it as well.”

This development is expected to encourage institutions, governments, and fintech firms to engage more with stablecoins, potentially accelerating global adoption.

While US dollar stablecoins remain dominant, Collins’ insights suggest the market will become more diverse as new backing assets and geopolitical factors influence stablecoin growth.

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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